The S&P500 Index Returns Based on the Year of the Dragon
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What's wild is China typically only sees about $218m/day in ETF flows = the government is 10x the average. It would be like if the US Treasury bought $100b/day in ETFs here. Still, this doesn't seem to be enough to stem China stocks decline... Source: Bloomberg Intelligence, Eric Balchunas
Source: Shay Boloor
According to Goldman Sachs, short leverage in its prime brokerage book is near the top of its multi-year range. Net trading flows show the heaviest selling since the April lows. The crowd is leaning heavily bearish. And crowded shorts can become rocket fuel. A modest rally can force investors to cover. That buying pushes prices higher, triggering more covering. The feedback loop can turn a rebound into a squeeze—and potentially a melt-up. Positioning alone won’t trigger it. A catalyst still matters. But the more crowded the bearish trade becomes, the more painful an upside surprise could be. Sometimes, the biggest risk to a bearish market is how many investors are already betting on it. Source: Goldman, Kurt S. Altrichter, CRPS® @kurtsaltrichter

